Pokémon GO: a TIPPING POINT for Japan?

The game shows the innovative resilience of Japanese companies. - by Yoshito Hori

This July something happened that hasn’t happened for a very long time.

A craze that originated, or at least partly originated, in Japan, has swept the world as fast as you can say Sony Walkman!

On July 6 Pokémon GO, the augmented-reality mobile gaming app, launched in the United States. Rolling out in more and more countries as the month went on, it finally reached Japan on July 22, making us only the 37th country in the world to get the game.

The wait was frustrating, but now I’ve got my hands on the game, I’m totally hooked. I’m at Level 22 in 10 days, without buying any items. (The player in the States who got to Level 40 only did so by using bots!)

For a product that is barely one month old, Pokémon GO already has a well-established origin myth.

The game’s creator is John Hanke, a 49-year-old serial entrepreneur from Texas who presided over the creation of Google Earth and Google Maps after Google acquired Keyhole, his third startup, in 2004.

In 2010, Hanke established Niantic Labs within Google and began developing Pokémon GO in summer 2014 after an April Fool’s collaboration between Google Maps and the Pokémon Company showed the appetite for combining location-based gaming with globally popular characters.

Interesting though this origin story is, what really excites me is what Pokémon GO tells us about how Japan’s corporate sector is changing.

I see 3 key takeaways.

1) Open innovation is a GO.
Despite Japanese companies’ reputation for preferring to innovate in-house (NIH = “Not Invented Here syndrome”), Pokémon GO provides a great example of two Japanese firms—Nintendo and the Pokémon Company—leveraging an external partner to extract value from their in-house I.P.

Japanese companies are shifting toward open innovation.

2) Corporate transformation is a GO
Often mocked as stodgy monoliths, in fact Japanese companies have a knack for self-reinvention. Carmaker Toyota started life making looms for the textile industry. And Fanuc, the global leader in industrial robots, was spun out of computer-maker Fujitsu in 1972, which itself was spun out of Fuji Electric in 1935. More recently, a diversified Fujifilm is thriving, while rival Kodak, over-dependent on photographic film, went bankrupt in 2012.

Nintendo, which started out as a playing card maker, is in this sense a typical shape-shifting Japanese company. It finally broke free of the closed platform of proprietary consoles to launch Miitomo, its first smartphone game, this March, with another two releases slated for later this year. Pokémon GO is clearly part of that transformatory trend.

Japanese companies are flexible, pragmatic, always changing.

3) The fun factor is a GO
Back in the 1970s and 1980s, Japan was famous for making products like portable music players, miniature TVs and sexy sports cars that were as fun as they were innovative.

A resurgence in the “national fun factor” is now under way. LINE, the Japanese messaging app which made its stock market debut on July 24, owes its popularity to its playful stickers and emojis.

Pokémon GO, too, is fun for all sorts of reasons—the fact that you play it outdoors and with other people are of course major plusses—but the cute pocket monsters account for at least as much of the game’s appeal as its location-based aspects.

The fun factor has knock-on effects on the rest of the economy. More and more foreign students are coming to Japan to study, in part because of their fondness for manga and anime like Dragon Ball, Naruto, One Piece, and so on.

Japanese companies still know how to deliver fun experiences to the world.

Thanks to Pokémon GO, Nintendo's stock has been on a tear. more than doubling between July 6 and July 19. This is good news for Japan’s beleaguered investors.

In fact, Pokémon GO is good news all around.

In my case, it’s not just providing me with lots of fun, it’s also giving me plenty of reasons to feel optimistic about the future of corporate Japan. Everything is “tipping” in the right direction.